Indonesian food demand system: An analysis of the impacts of the economic crisis on household consumption and nutritional intake

As a result of the 1997/98 economic crisis in Indonesia, real household incomes fell, the price of food rose relative to non-food items, and the price of rice rose relative to other foods. This dissertation uses household survey data from before and after the crisis to examine the effects of the economic crisis on food consumption and nutritional intake, to estimate a food demand system that allows estimates of the sensitivity of demand for nutrients (calories, protein, fats, and carbohydrates) to household expenditure and food prices, and to simulate the effects of alternative food policies on nutritional intake.; The food demand system is a linear approximation to the almost ideal demand system and is estimated in a two-step estimation process. The first step involves probit estimation of the decision equations for nine food groups. The second step involves a least squares estimate of nine food demand equations with correction for selectivity. The second step also imposes homogeneity and symmetry conditions across equations. Price variables in both steps are corrected for price variations due to quality effects and quantity premiums. Nutrient content elasticities are used to correct the quantity elasticities to obtain nutrition elasticities.; We find that nutrition consumption is highly responsive to household expenditure. The calorie elasticities with respect to total expenditure are 0.8 in 1996 and 0.9 in 1999. The estimated calorie-rice price elasticities equaled −.22 before the crisis and −.17 afterwards. Nutrition elasticities are also estimated separately for several household groups based on income, location, and job sector.; The pre-crisis nutrition elasticities were used to predict the consequences of the crisis. Declines of calorie, protein and carbohydrate intakes were predicted relatively well. The post-crisis nutrition elasticities were used to simulate some food policy schemes including the rice sector trade liberalization, and subsidies on rice and other commodities. The policy simulations also give direction on short-run food safety net programs and long-run food security in Indonesia in order to preserve or improve the nutritional status of particular target groups.